CPP Offers Insurers Competitive Advantage

Chubb, an insurer, says that P&C insurers should not receive funds from the US Treasury because it would give them an unfair competitive advantage. CPP was created to infuse the financial system with liquidity in times of distress.

Chubbs COO, John Degnan, stated, “We do not believe that allowing property and casualty insurance companies to participate in the CPP is consistent with the stated purpose of the Act,” in a letter to the Treasury. He also stated that the P&C industry does not pose any systematic risk to the economy and therefore does not require a bailout.

Degnan went on to state that if P&C insurers participated in CPP, there would be an adverse affect on competition because the insurers would be allowed to get capital at a lower costs than their competitors. He claims that it would be unfair for companies such as his who have been cautious and conservative with their business practices and investing, but would not be able to take advantage of the bailout.

http://www.strategicrisk.co.uk/story.asp?sectioncode=23&storycode=375112&c=2